THE new Consumer Duty requirements from the FCA are due to be finalised at the end of July for implementation by April 2023.
What are the implications for leasing brokers?
Paul Parkinson, CEO of Synergy Car Leasing and chair of the BVRLA Leasing Broker Committee, says that it’s crucial to keep a sense of perspective.
“It’s important to review the consultation paper and not worry too much about the high-level strategic elements,” he says.
Having said that, you should start planning now and make a simple plan. And make time to record your own process. So when guidance comes out you’ll be ahead of the game.
Paul was part of a panel (below) discussing the Consumer Duty in a special BVRLA webinar to highlight the issues raised by the new regime.
Toby Poston, BVRLA’s director of corporate affairs, introduced the event, saying:
It’s all about consumer protection. The FCA will drop a new piece of legislation in July for introduction in April. It’s a major change in the way the FCA regulates our industry. They expect a major change in mindset.
What’s more, the definition of ‘consumer’ includes all clients other than professional clients – such as large companies and government agencies – so the new Consumer Duty regulation applies to unregulated services provided to SMEs.
The presentation was led by the BVRLA’s legal and membership director, Shashi Maharaj and Jo Davis, CEO of Auxillias.
Laying out the broad framework, Jo said the key behaviours the FCA expected were:
- That firms should take all reasonable steps to avoid foreseeable harm to customers
- They should take all reasonable steps to enable customers to pursue their financial objectives
- And to act in good faith
Jo and Shashi went on to expand on the four outcomes expected from the new Consumer Duty regime:
Outcome 1 – Products and services
- Products and services should be fit for purpose, designed to meet customer needs and targeted to the right consumer.
- Examples of poor behaviours were consumer credit products designed to generate high fees from late payment fees or relending.
Outcome 2: Price and value
- Products and services should be fit for purpose and represent fair value. Products should be assessed at the design stage and then monitored on an ongoing basis.
Outcome 3: Communication /consumer understanding
- This is about providing information that is digestible by the consumer, such as the costs consumers are likely to pay and the risks associated with the product.
Outcome 4: Customer services and support
- Ensure customers are fully supported when buying a product and regular monitoring of the process.
Shashi summed up the presentation by saying businesses needed to get ready for the new Consumer Duty regulation and should work on gap analysis of current practice and the required mode of operation in April 2023.
“The wait and see approach is unlikely to be a successful approach,” he added.
What should leasing brokers do to comply with Consumer Duty requirements?
Paul Parkinson says that while much of this could seem overwhelming, it is important to prioritise the aspects directly affecting brokers.
April 23 affects big business and small business alike. Big businesses have a super tanker to turn around; small businesses can be far more agile. As brokers we have built our business on quality, so this new Consumer Duty holds no fear. The important thing is to get ahead of the game.
What should brokers do?
The key thing for me is to read the consultation document. It is not a difficult read. There are clear outlines for the new Consumer Duty. It’s a good starting point.
Then we have to take responsibility for our own position. How do we meet the four outcomes? Do we give customers the outcomes we would like to see from other businesses we transact with? So it’s important to simplify all this. Address your own business against the four outcomes – and then assess it against the FCA requirement when it comes out in July. From there you can make any adjustments necessary.
Leasing brokers can access the Consumer Duty proposals here
Click here for the FCA’s A New Consumer Duty.
Ralph Morton is the leading journalist in the leasing broker sector and editor of Broker News, the website which provides information and news for BVRLA-registered leasing brokers. He also writes extensively on the fleet and leasing market in both the UK and Europe.